When there is the smell of oil, minds get stirred up … It creates a mirage in people's heads. If we do not know how to manage it, it will be hell here (Manuel Pinto da Costa, former president of STP, cited in Shaxson, 2007:164).
Perhaps the best hope for STP is that there is sufficient external pressure from international institutions, creditors and the incipient civil society to ensure greater transparency in the distribution of oil revenues. Otherwise, STP is likely to suffer the same ills as other oil-rich states in Africa, except that any civil war or social unrest is highly unlikely in the gentle Santomean society. STP has always been very peaceful and, from this perspective, a highly positive role model for the continent (Frynas et al. 2006:19).
There is no certainty yet that there's going to be economic production of oil. There is a good chance that there may not be. And part of me feels, well, that's probably a good thing, for if there was, it's just going to be … a disaster (oil industry employee, STP, March 2007).
For the ethnographer, people's anxious question about the country's oil potential re-poses itself as: ‘How might one study an oil economy without oil?’2 Just how much oil there is and whether it is ‘commercially viable’, as they say in the industry, is to date highly doubtful. So, is it possible to speak of an oil economy if no oil is being extracted, transported, sold, and refined? One way of beginning to examine STP's emergent oil economy is to look at the materialisation of the assumed presence of oil in the country.
There is, for example, the impressive new building of the National Petroleum Agency, co-financed by the World Bank in which a cadre of local technicians is busy managing the islands’ future oil economy. There are public discussions and newspaper reports on the latest developments. In addition, there are the more and the less desirable by-products: the genuine and the shady business people; the illegal immigrants, traders and peddlers; the prostitutes; the banks (whose number has almost tripled in the last few years); the inflation; the rising property prices and the real estate speculation. There are also the latrines sponsored by Chevron under its ‘social programme’ obligations and the trucks recently given by Chrome Energy – in preparation, it is suspected, for their participation in an upcoming licensing round. Similarly, a relatively non-violent coup d'état in 2003 has been interpreted as symptomatic of a resource curse afflicting Santomean society (Frynas, 2006; Humphreys et al. 2006; but see Seibert, 2003). As Frynas et al. conclude, ‘[t]he prevalence of resource curse effects were already apparent even before STP started producing any oil’ (2006:14).
In short, the assumed presence of oil has had a number of effects and provoked particular activities in anticipation of an (un)certain future. Numerous consultants, NGO representatives, and foreign advisors have been attracted by what they identify as the country's great need for expertise in the face of incipient oil wealth. They offer technical assistance and advice, and hold workshops, public deliberations and conferences. Of crucial importance, in this regard, has been the so-called management of expectations. It involves placing boundaries around people's hopes and dreams, which are assumed to be irrational, destabilising and potentially dangerous. Key to this has been the notion of a ‘resource curse’, today a key term in the analysis of oil-rich African states and of Santomeans’ vocabulary in describing their country's future, as well as a rich example allowing us to observe an enactment of socio-economic theory.
Background & History
On 30 June 2007, the US representation in STP invited ex-pat Americans, officials and the local ‘who's who’ to an early Independence Day party. This was held in STP's fortress São Sebastião, built in the 16th century by the Portuguese colonial settlers and turned into a historical museum after independence in 1975. With its limited resources, the museum is an effort to display a national history for a young independent African state. Within its thick walls now came to mingle the existing and possibly the new powers that be. US presence on the island is currently limited to the vast compound of the Voice of America that broadcasts from here all over South-West Africa and an occasional naval ship sitting just outside São Tomé's shallow port, a faint echo of what has apparently become a near continuous US navy presence in the region. The US has provided training for Santomean military under the ‘African Partnership’ programme, and US ‘Seabees’ have carried out works in local schools and hospitals. Their main task, however, has been to help build up STP's coast guard facilities and to complete, in 2007, one of the radar elements of the maritime domain awareness system. The system facilitates the rapid exchange of data among participating countries and seeks to cover the entire Gulf of Guinea region, which has been declared of strategic US interest, not least because of its existing and potential oil resources (McFate, 2008; Shaxson, 2007; Soares de Oliveira, 2007).
A fortnight later, 12 July, it was STP's own Independence Day. The festivities took place in Porto Alegre, São Tomé island's southernmost community, connected to the capital by a single coastal road. I hitched a ride with the American ambassador who had flown in from Gabon, down the road that was to be repaired for the occasion with Equato-rial-Guinean money. But it didn't get done on time, possibly because the money ran out or, as some people suggested, because too much of it disappeared into the pockets of entrepreneurs. The ceremony was attended by a series of local officials and foreign diplomats, including the Portuguese, the Brazilian, the French, the Nigerian, and the Gabonese ambassadors. Finally, a helicopter arrived with the president and his guests of honour, the presidents of Gabon, Congo-Brazzaville and Equatorial-Guinea. A bus, recently gifted by Taiwan, carried them from the airfield that had been cut into the dense forest, to the location of the festivities. As a display of Santomean state and nation, the Independence Day festivities appear improvised, charming and a little parochial. Yet they are also a display of foreign and international powers that are seeking to circumscribe STP's place on the geopolitical map of oil.
The expectation of vast offshore oil resources has given STP a significance it hasn't had since its days as Portuguese entrepôt and as world-renowned cocoa producer. Despite the recent $314m debt relief under the HIPC scheme, STP is likely to remain one of the poorest African countries and almost totally dependent on foreign aid. Its approximately 160,000 inhabitants are the descendants of African slaves and contract workers, mainly from Cape Verde, and the Portuguese colonial settlers who lived on the islands from the 16th century onwards, and introduced sugar, coffee, and cocoa. STP remained a plantation economy until the end of the colonial period (Seibert, 2006:46). Political independence was achieved in 1975, followed by the establishment of a socialist one-party system. The economy was nationalised and the former plantations were brought into state ownership. Cocoa production based on plantations had been unprofitable since the 1920s (Frynas et al. 2006:2; Seibert, 2006:45) and by the late 1970s mismanagement and falling global cocoa prices led to its virtual collapse. From the late 1980s, STP underwent a democ-ratisation process, accompanied by economic reforms and the dismantling of the large estates and privatisation of landed property with uneven, but overall disappointing, results. Cocoa still represents 90% of all exports, and the country's economy remains extraordinarily fragile. In this context, oil seemed a blessing.
Oil extraction in STP appeared to become a real possibility with developments in ultra deep-sea exploration, coupled with the growing significance internationally of West African oil. The 1990s were characterised by new discoveries and rapid growth in production, for example, in Angola and Equatorial Guinea. Aside from some speculative onshore drillings in the 1970s and 80s, STP's petro-era is generally seen to have started in 1997, with the ill-fated agreement signed with a small company called ERHC (Environmental Remediation Holding Company). Oil can now appear a firm part of STP politico-economic identity. As one of the director's in the National Petroleum Agency noted in conversation, Santo-means have always associated themselves with oil. But this oil economy has had a difficult start (see also Frynas et al. 2003; Seibert, 2006; Shaxson, 2007 & Soares de Oliveira, 2007). First, together with ERHC the STP government set up a dubious joint venture petroleum company named STPetro. Both ERHC, and subsequently Mobil, were guaranteed rights to exploration and revenue shares, which vastly exceeded what is deemed standard in the industry. Especially the ERHC deal, later acquired by the American-Nigerian Chrome Energy, is now widely criticised as detrimental to the country's interests. Border disputes with Nigeria led to a lengthy process of negotiations. These were settled in February 2001 with the agreement of a Joint Development Zone (JDZ) of which Nigeria holds 60% and STP 40%, governed by a so-called Joint Development Authority (JDA) with a head office in Abuja. President Fradique de Menezes, who came into office in 2001, is viewed favourably by most foreign observers impressed by his attempts to correct the mistakes made by his predecessor, by calling on foreign assistance and by emphasising the country's intentions to remain transparent. In a first bidding round in 2003/4, only Block 1 was signed off for $123 million to a consortium of three companies, Chevron Texaco (51%), ExxonMobil (40%) and the Nigerian-Norwegian Dangote Energy Equity Resources Limited (9%). A further round in 2005 for Blocks 2, 3 and 4 involved too many small, unknown corporations partly with Nigerian connections. This result was seriously questioned (Procura-doria Geral, 2005) but not annulled.
Exploration has yet to show significant positive results: Chevron Texaco deemed the finds of its first drill in Block 1 of the JDZ, conducted in 2006, as not commercially viable. In early March 2007, the Chinese company Sinopec and the Canadian corporation Addax operating in Blocks 2 and 4, announced that they had hired an Indian vessel to conduct drillings in 2008, but these drillings are likely to be postponed until 2009. Chevron, too, announced plans to perform a second drill in 2008. In late 2007, Exxon Mobil's interests in Block 1 were bought by Addax. In short, STP's future as a petro-state appears elusive. STP has received a $49 million share of the signature bonus for Block 1. Much of this has been spent on advances received from Nigeria, including $13 million towards the operational costs of the JDA in Abuja (see also Seibert, 2006). Even if there is a commercial discovery any time soon, actual exploitation is not expected to begin before 2012 or later. Outstanding payments for the signature bonuses for blocks 5 and 6 seem increasingly unlikely. Risking and hoping, however, will continue.
Diagnosing the Resource Curse
Newspaper articles on STP have speculated how the discovery of offshore oil might change São Tomé e Príncipe rapidly and dramatically. In 2002, the New Yorker magazine published a long article asking, ‘Who needs Saudi Arabia when you've got São Tomé?’ Only two years later, Fortune magazine posed the worried question, ‘Will oil spoil this African Paradise?’ Most recently, The Guardian suggested, quoting a representative of International Alert – one of the large international NGOs seeking to prevent oil-related conflict in STP – that it would be best if there was no oil at all. Similarly, academic research on STP oscillates between diagnoses of an incipient resource curse, facilitated by a long-standing system of clientelism and corruption, and half-hearted assertions that the tiny country might follow a different path from its petro-neighbours. In 2007, São Toméans particularly from the urbanised, educated parts of society – including civil servants, administrative and private sector employees – seemed disappointed regarding the advent of oil. They increasingly considered it futile to expect oil to improve their situation. Many of them have participated in one of the numerous seminars and workshops held on the topic of oil and are keenly aware of its potentially negative consequences. Their self-consciously reasonable outlook, I was told, is markedly different from the high hopes that were being traded in the streets, bars and homes of Santomeans only a couple of years ago, and which are claimed to be still prevalent among the uneducated poor, living in the former plantations.
Continuing high hopes and expectations are generally blamed on the government and politicians, trying to gain votes and attract investment to the country, or on the media, keen to build up a picture of STP as the ‘new Kuwait’. Sensationalist reports on the prospects of STP in the early 2000s dealt in hugely inflated figures of several billion of barrels of oil reserves. A third source of exaggerated expectations are expert documents. I heard angry comments, for example, about an ‘irresponsible’ IMF working paper, published only in the summer of 2006, which begins by stating that ‘São Tomé and Príncipe is on the verge of becoming an oil-rich country’ (Seguar, 2006:4). The paper assumes as its base line the existence of a 500 million barrel oil field in the JDZ, and suggests that provided there is adequate regulation a prosperous future for STP will be almost certain. While the IMF may insist that this is purely a working paper, with all its implications of provisionality, and moreover, does not reflect the view of the organisation at large, to more sceptical observers such pronouncements seem dangerously open to – deliberate or inadvertent – misinterpretation.
Hope in relation to oil, and an alleged ‘cargo cult’ attitude, are considered problematic. If unrealistic hopes get disappointed, it is feared, the result is likely to be increased social conflict. In my conversations with World Bank technicians, UNDP employees, staff of the Petroleum Agency, NGO workers, and ordinary locals two imaginaries of the future were dominant. In the academic literature they are known as the ‘resource curse’ and the related ‘Dutch disease’. The resource curse has become an influential heuristic since the late 1980s both in the scholarship concerned with resource economics and in the large global financial agencies (e.g. Humphreys et al. 2007). The term was invented to explain what appeared inexplicable: countries rich in oil, diamonds, or other natural resources did not always enjoy rapid development equally in all sectors (Auty, 1993; Humphreys et al. 2007; Karl, 1997; Rosser, 2006; Sachs and Warner, 2001; Watts, 2004). Today ‘the curse’ is variously taken to imply detrimental economic performance, violent conflict, corruption, or the entrenchment of authoritarian political regimes (Rosser, 2006:7–8). The ‘Dutch disease’ is sometimes seen as a version of the resource curse – or its herald. The notion describes the effect of the influx of huge oil revenues, the depreciation of the local currency, the neglect and decline of other economic sectors, first and foremost, of agriculture.
Students and observers of STP have spotted signs of the resource curse and the Dutch disease in the reliance on foreign aid, in the way Santomeans eat (an estimated 50% of their diet consists of imported produce), in the well-known but rarely punished corrupt behaviour of STP's elite, and in just about everybody's laid back lifestyle summed up by the Creole term lêve-lêve (e.g., Frynas et al. 2006). There are also the rural flight, the wage increase, and the inflation, which are all understood to be key symptoms (Soares de Oliveira, 2007). STP's fragile position has not been helped by the notorious instability of its government. The 2003 coup d'état is sometimes interpreted as an early expression of discontent with the way the government (mis-)handled STP's arrival in the oil era. However, it may be more precise to say that rather than oil having caused the coup, the coup comes to matter because of now common negative expectations regarding oil in STP. What is interesting, here, is the plethora of activities that has been effected, directly and indirectly, by the anticipation of a resource curse and, conversely, the economy of expectation, consultancy and advice that this anticipation has provoked. This is the resource curse's performative effect (cf. Osborne and Rose, 1999) in the tiny equatorial island state.
Anticipation
On paper, São Tomé e Príncipe appears to constitute an exemplary oil economy. Its legal framework regarding oil is considered to be even better than that regulating the Chad-Cameroon pipeline, which was for some time held up as exemplary in the African context (Pegg, 2005). The so-called Abuja declaration, signed with Nigeria, defines a will to transparency in the JDZ. STP possesses an Oil Revenue Management Law enacted in December 2004, which includes the establishment of a National Petroleum Council and, currently, an oversight commission and a public information office. In addition, a National Petroleum Agency (ANP) has been created. STP also has a National Oil Account as well as a ‘Permanent Fund’ for future generations. More recently still, the Santomean government has endorsed the UK-led Extractive Industries and Transparency Initiative (EITI) and is busy setting up a national committee.
The country's status as a legal exemplar is partly due to what I term the anticipatory activities of international experts, transnational agencies and the national government itself. These activities include the technical assistance given by the World Bank, UNDP, or more recently the Millennium Challenge Corporation, but go beyond that. They include the projects implemented by international NGOs and the advice given by well-meaning experts who see the tiny country a convenient laboratory for their theories. Crucially, laws, documents, and paper alone are deemed insufficient in guaranteeing a prosperous and well-managed future for STP. Santomeans have little faith in the effectiveness of their state institutions and judiciary system which they know lets those doing wrong get away with impunity. And a look at other petro-states in the region shows that laws and committees do not readily translate into well-governed resource driven economies. Anticipatory activities have not stopped at the level of the state, the law or institutional reform. What is especially needed, it was suggested to me, is the creation of civil society and a ‘change in mentality’. Here, I will briefly discuss four rather different projects that all intend to contribute to STP achieving this institutional, social and behavioural transformation.
In 2003, a team of professors and graduate students from the Earth Institute at Columbia University, New York, under the leadership of the institute's director Jeffrey Sachs travelled to STP to implement a legal advisory project. Invited by President Menezes, and partly sponsored by the Open Society Institute, the Columbia team advocated a holistic approach that took into account all the various aspects of Santomean society, including malaria, sanitation, and electrification. A central objective was to develop a framework for transparency in public expenditure. Their efforts were highly appreciated: they lay the basis for the petroleum law, and delivered a prestigious project that helped the country demonstrate its willingness to good governance.
The Columbia team was key in making ‘oil’ an explicitly public issue. They took advantage of the National Forum, organised as a response to the 2003 coup d'état and intended to bring unity to the country destabilised by military and social unrest and split into factions. In this context, the team organised meetings in 56 roças, villages, and towns, to explain the current and potential future developments regarding oil in STP. Deliberative groups, led by local facilitators, answered questionnaires to assess people's wishes and expectations regarding a future with oil. The Columbia team now commends its intervention as a successful process of deliberation with measurable effects (Sandbu, 2004; but see also Humphreys et al. 2006). The Forum, the questionnaire, and the deliberations are claimed to have transformed people's preferences in such a way that they would be more reasoned, less selfish and more public-spirited (Sandbu, 2004). They have been regarded as important instruments in re-constituting both officials and ordinary Santomeans as future inhabitants of an oil-rich country.
The World Bank's current International Development Assistance for STP includes $5 million for a so-called Governance Capacity Building Project. It supports public finance management and helps build the institutional framework of the nascent petroleum sector. The focus on oil, governance and public finance management is to be continued in the coming years with further $4 million budgetary support funding. It reflects the World Banks changing policy of wedding poverty reduction programmes to support for the extractive industries sector (as in Chad-Cameroon pipeline case, Pegg 2005). Institutional thinking now partly reflects a scholarly critique of previous approaches made, for example, by Michael Watts (2001; 2004), which goes beyond a simplistic resource determinism. Bad governance, rather than oil per se, becomes seen as the central cause of the resource curse. Critical to the Governance Capacity Building Project in STP has been the design of a national petroleum law, the establishment of a Court of Accounts – as a general auditing body -and the set up of a National Petroleum Agency. The training provided by oil companies involved in STP's Joint Development Zone – and rivaled by those financed by and conducted in Taiwan -has supposedly provided civil servants and government employees with indispensable skills and knowledge. ANP staff have been busy preparing a licensing round for the Exclusive Economic Zone, and the revision of STP's oil law for the purpose. The ANP has also held seminars on issues to do with oil. For example, in April 2007, a day-long seminar on ‘Local Content’ served to present the findings of a study commissioned by the ANP, financed by the World Bank, and conducted by a Portuguese consultancy firm. It attracted a sizeable audience of perhaps 100 civil servants and state administrators, people from the banking and business sector, from international organisations, NGOs, and oil companies. It demonstrated to people the need for preparation, especially the creation of mechanisms to maximise the wealth that oil is likely to generate. The aim, to borrow James Ferguson's term is to ‘thicken’ the presence of the oil industry in STP (Ferguson, 2005).
The London-based NGO International Alert (IA) has had a presence in the country for several years. Together with UNICEF and with partial funding from USAID, it has set up a media centre for local journalists and two community radio stations. Together with the Publish What You Pay Campaign, IA held two conferences in STP which allowed civil society actors from diverse countries in the region to exchange experiences and information about living with oil, including institutional and contractual frameworks, economic and political repercussions, the relevance of the EITI, the importance of fiscal discipline, and the management of expectations. It also organised a trip to Norway, on which a mixed group of parliamentarians, local business representatives, journalists and civil society representatives were introduced to how Norway has become a prime example of an oil economy which managed to escape the resource curse. All these activities have been part of a concerted effort to strengthen ‘civil society’ in STP, which is considered rather weak and ill-prepared for the coming of oil.
A further element in this process of STP constituting itself as prudent and transparent oil state has been the signing up to EITI, the UK-led initiative which aims to devise principles to assure transparency in the extractive industries sector. A key mechanism has been the publication of company payments and revenues received by governments which are monitored by the national EITI committees that bring together the presumed opposing stakeholders: governments, the industry and civil society. In STP, the set up of the EITI committee was pursued with much pressure in the second half of 2007, due to a looming deadline. Ironically, the initial delay and subsequent haste with which the process was conducted has led to concerns about a lack of transparency and civil society involvement in this process. There were also tensions regarding the parallel setup of the Oversight Commission included as a monitoring body in STP's oil revenue management law. Planning of the two entities initially went ahead separately but there is now talk about merging them to achieve greater effectiveness. Interestingly, some of those involved ascribed a clear advantage to ‘global’ initiatives, such as EITI, over local ones. Even though they are not binding they are felt to carry more weight than a commission anchored in STP law which is deemed, in large part, ineffective.
Conclusions
STP's oil economy is an economy in which expectations have been a key object of concern. Their production, circulation and exchange are carefully guarded. One of these expectations is now the resource curse itself. Its flipside is the expectation of transparency and good governance. In other words, attempts to control and manage people's expectations have generated other kinds of hope in STP. Both types of ‘imaginations of the future’ are made and promulgated partly through the initiatives and projects, seminars and workshops, the reports and legal documents that I have discussed, here. Depending on the results of the upcoming drillings, Santo-mean national planning may soon have to consider a ‘no-oil’ scenario.
While the hope for oil in STP has not completely faded away, one can see people quietly welcoming the delay in the take-off of the country's oil economy. Especially for members of the urban educated class on whom this research has focused, and for whom the ‘curse’ of oil appears to be a real possibility, time is salvation. The postponement of the oil future, they say – which is produced by a set of political, economic, technical, and geological conditions and circumstances – might allow STP to prepare itself sufficiently or to continue seeking alternative routes for development. This briefing has highlighted the significant resources have been poured into preparing STP for its potential oil future. It also sought to open up a critical perspective on the huge claims involved. Between them, the activities of advisory agencies, government, NGOs, and oil corporations explicate potential futures and the familiar (and insufficiently researched) consequences of the extractive industries, specifically oil, in order to divert them. But will they make a real difference? Indeed, are there any simple solutions to the resource curse, which research increasingly shows to be a highly complex set of affairs? Or will these activities simply aid in a sophisticated make-believe?